The US considers Jewish communities in Judea, Samaria and eastern Jerusalem to be illegitimate – even though international law allows Israel to build in the disputed territories it took control of in a defensive war in 1967.

Prime Minister Benjamin Netanyahu spoke to US Secretary of State John Kerry over the weekend to iron out the latest diplomatic incident between Jerusalem and Washington. Israel recently decided to authorize the building of more homes in Samaria, which the Obama administration perceived as the construction of a “new settlement,” sharply criticizing it as an obstacle to peace.

Netanyahu explained to Kerry that the decision to advance a plan that would build some 100 housing units in the Shilo area in Samaria was compensation for Israeli families who will soon lose their homes following a court ruling that their homes must be demolished because they were mistakenly built on privately owned Arab land.

The plan also includes optional plans for another 200 housing units and an industrial zone.

The new housing would be built on state-owned land in an existing community and would not change its boundaries or geographic footprint. The construction is necessary to relocate Israeli residents from another area who must leave their homes due to the court order.

The houses are to be added to an existing Israeli community and do not consist of a “new settlement.”

“Israel remains committed to a solution of two states for two peoples, in which a demilitarized Palestinian state recognizes the Jewish state of Israel,” Israel’s foreign ministry said in a statement last week. “The real obstacle to peace is not the settlements — a final status issue that can and must be resolved in negotiations between the parties — but the persistent Palestinian rejection of a Jewish state in any boundaries.”

The two also spoke about other regional issues.

Netanyahu is reportedly seeking other solutions to the crisis in Israel, which could threaten his coalition and topple his government.